This Morning: Apple Goes Nuclear, Cheers for IBM, GameStop

By Tiernan Ray

Here are some things going on this morning in your world of tech:

The Street is reflecting on Apple‘s (AAPL) having upped the ante in its patent battle with Samsung Electronics (005930KS). You’ll recall August 24th it won a patent victory against Samsung in a California jury’s verdict finding infringement by Samsung smartphones and tablets. Last Friday, Apple added to a list of devices it is now alleging infringe the latest models of Samsung phones, including the “Galaxy S III,” as related by The Wall Street Journal’s Evan Ramstad. The trial date for the latest accusation is not until March, 2014, however.

In a note to clients this morning, Topeka Capital Markets’s Brian White writes of the addition of the Galaxy S III to the list of infringing devices that it shows Apple has “gone thermonuclear,” alluding to remarks by late Apple founder Steve Jobs.

“In our view, the addition of the Samsung Galaxy S III is significant and will compete with the new iPhone that is expected to be unveiled next week, while the inclusion of the newly launched Galaxy Note 10.1 is also important,” writes White.

Apple shares this morning are up $4.76, or 0.7%, at $670, while shares of Samsung fell 1.2% in Seoul trading to close at ₩1,218,000.

Speaking of Apple, and the iPhone, there’s a lot of chatter this morning about the next model. Barclays Capital’s Ben Reitzes this morning issued a note regarding what is expected to be an Apple media event on September 12th for the unveiling of the “iPhone 5.” Reitzes thinks it will be even bigger than he’s already thought it would be, writing, “we believe upside is possible vs. our estimates in December and March as we believe build plans indicate a potential 50 million iPhone units/quarter.”

Likewise, Cowen & Co.’s Matthew Hoffman this morning raised his estimate for December quarter iPhone sales to 48 million units from 42 million, which he writes puts him in line with consensus at this point. Hoffman cites two factors to keep in mind: the inclusion of “near-field communications,” or NFC, for payments, is still uncertain (he thinks it won’t be in the iPhone), and there are a limited number of the faster “long term evolution,” or LTE, networks worldwide that the new iPhone supposedly supports.

Mind you, The Journal’s Juro Osawa on Friday reported that Sharp has been having trouble mass-producing the new display that is believed to be used in the iPhone 5, citing unnamed sources. Osawa wrote that it’s questionable whether Apple will have sufficient supply to meet demand for the new model.

International Business Machines (IBM) this morning got a vote of confidence from Barclays’s Reitzes, who raised his rating on the stock to Overweight from Equal Weight, writing that he likes the prospect of a new upgrade cycle for the company’s mainframe computers. (IBM introduced new models last week.)

Reitzes raised his price target on IBM to $240 from $208. IBM shares this morning are up 57 cents, or 0.3%, at $195.42.

Advanced Micro Devices (AMD) gets the cold shoulder this morning from Evercore Partners’s Patrick Wang, who cut his rating on the shares to Underweight from Equal Weight, and cut his price target to $4 from $5, writing that while he’s not negative on the company’s “roadmap” of chips or its “future products,” nevertheless, “the fruits of the new mgmt team’s strategy won’t ripen until late 2013 or later,” which seems to long a period to wait while the company carries excess inventory and has a “a less competitive product line-up in the backdrop of poor PC demand.”

Shares of AMD this morning are down 7 cent,s or almost 2%, at $3.65.

Shares of GameStop (GME) are up 92 cents, or almost 5%, at $20.01 after the stock was raised to Buy from Hold by Goldman Sachs’s Brian Karimzad, who writes that he sees “tactical opportunity” in the shares of the video game retailer over the next 12 months.

Karimzad, who set a $25 price target, raised his revenue and EPS estimates for next year, writing that there should be a better slate of new game introductions this quarter and next, ending the drought in new titles, and that the company can be expected to repurchase about 12% of its shares annually, while offering a 5.5% dividend yield.

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There are 11 comments

SEPTEMBER 4, 2012 10:42 A.M.

Anonymous wrote:

"The trial date for the latest accusation is not until March, 2014, however."
2014-A lot of good that will do to stop Samsung.

SEPTEMBER 4, 2012 11:24 A.M.

Alex wrote:

"Sharp has been having trouble mass-producing the new display that is believed to be used in the iPhone 5, citing unnamed sources". Now who might these sources come from? Don't you get tired of these news of so called shortage to create a demand? If analysts have been forecasting 50-250M units. Don't you think those dumbos from the higher up would have added lots of suppliers? So which is true?

SEPTEMBER 4, 2012 11:50 A.M.

Anonymous wrote:

Whether every case Apple wages against Samsung is successful or not, I would like to see them as being smashing PR events. That would be the Steve Way. Then down the road all the trials would serve as material for a tv miniseries: Apple taking on the evil empire. That's right. Google and Samsung are the evil empire. Taking something for nothing is evil man. So shut up.

SEPTEMBER 4, 2012 12:02 P.M.

oa wrote:

Apple‘s (AAPL) lost its patent battle with Samsung in Korea, Australia & Japan.. did that tell you something wrong in US verdict??

SEPTEMBER 4, 2012 12:28 P.M.

quiterie wrote:

There are 8 devices Apple will announce between now and year end, so there is plenty of fuel for AAPL to continue breaking new highs through January 2013, above $800 by then. Everyone talks about the new iPhone and how gigantic its sales will be, but the mini iPad in multicolor is going to break all records, including those of the iPhone. Thinner, lighter, larger display (than all junk knockoffs'), better battery life, gazillions apps, and extremely competitive price will make every kid and most parents in the US, China, and everywhere else screaming for one.

SEPTEMBER 4, 2012 12:45 P.M.

hedge wrote:

Samsung smartphone market shares 32%, aapl 18%

Nobody give a shit about over-priced aapl prducts..

SEPTEMBER 4, 2012 12:57 P.M.

@ hedge wrote:

STFU. Of course people care. People like Samsung care because they've got 36% of whatever and only 15% of the profits for the sector while Apple makes 71% of the sectir's profits. Now! Eat me! Okay. Open wide. And swallow. Swallow it all. Yum yum.

Crazy how LG prada looks alot like the iphone which was released 6 months before iphone first releaseNot to mention, Braun LE1 shares alot of similarities with the Apples total line of design, created in the 50s. Apple is great at copying then adding to it, then patenting it, then sueing companies that copy their copy tactics. SMH apple has sheep as followers and its sad to see that you can only do what the great CEO of apple tells you what you can do with their products. They also enjoy the new upgrades each year but has to buy into it even tho the older model is more than capable of doing the Upgrade, but apple is about that money and sale. No thanks, i'll stick with open source.

SEPTEMBER 5, 2012 12:44 P.M.

A Pull wrote:

Of course, when Samsung sues Apple over LTE, then the party really begins.

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About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.